The International Monetary Fund today issued a fresh warning that Britain is on the brink of recession.
In its latest World Economic Outlook (WEO), the IMF predicted that the UK economy would contract by 0.1% next year as growth across the developed countries slowed to almost zero.
The downturn will mean lost jobs, with the unemployment rate forecast to rise from 5.4% to 6.0%, while the public finances were said to be “considerably weaker” than in previous slowdowns.
However the IMF said that it was expecting Britain to bounce back strongly in 2010 with a healthy 2.2% rate of growth.
As the effects of the financial turmoil continue to reverberate through economies throughout the world, the IMF warned that the position was more precarious than at any time since the Great Depression.
“The world economy is entering a major downturn in the face of the most dangerous financial shock in mature financial markets since the 1930s,” the WEO said.
Olivier Blanchard, the IMF’s economic counsellor and director of research, said that it was now essential that authorities around the world took concerted action to prevent the situation becoming even worse.
“The financial crisis has clearly gotten worse, and no country will be fully immune from the effects on the real economy,” he said.
“It is too late to avoid a slowdown, but strong and co-ordinated policies can avoid even worse scenarios.”